India, Qatar disagree on pricing of LNG

India has sought an additional 3-4 million tonnes liquefied natural gas (LNG) a year from Qatar but talks were stuck on Friday over pricing of the fuel.

Petronet LNG Ltd, which at present imports 7.5 million tonnes a year of LNG from Qatar under a long-term contract, sought an additional 2-3 million tonnes while state gas utility GAIL India wanted one million tonnes for 20-25 years.

The world's largest LNG exporter was ready to supply all of the requirement, but wanted a price of $16 per million British thermal unit, sources privy to the negotiations held during the visit of Qatar’s Energy Minister Mohammed bin Saleh Al-Sada here. Qatar sought a price of 15-16 per cent of Japanese Crude Cocktail — the average price of customs-cleared crude oil imports into Japan, while New Delhi was willing to pay no more than 14.5 per cent of JCC. At present, it is less than $105 per barrel.

Sources said India was willing to pay a price equivalent to what it is paying Exxon Mobil Corp for buying 1.5 million tonness a year of LNG under long-term contract from Australia's Gorgon project. RasGas of Qatar now supplies 7.5 million tons a year of LNG under long-term contract at a price indexed at 12.67 per cent of JCC.

Qatar, they said, has been asked to make the final offer. LNG is natural gas liquefied at sub-zero temperature that can be transported in cryogenic ships. Sources said Petronet wants additional LNG from 2013 at its Dahej terminal in Guajrat whose capacity is being expanded to 15 million tonnes a year from current 10 million tonnes, as well as at the under-construction 5 million tonnes a year terminal at Kochi in Kerala.

GAIL wants LNG at its almost ready import facility adjacent to the Dabhol power plant in Maharashtra. To lure Qatar, New Delhi offered the Gulf nation equity in petrochemical plants that Oil and Natural Gas Corp (ONGC) is putting at Dahej in Gujarat and Bharat Petroleum Corp Ltd is planning at Kochi.

Also, Mangalore Refinery and Petrochemical Ltd's proposed chemcial complex was also offered for equity participation during talks held over two days.

Besides offering additional LNG, the visiting Qatari Minister also offered to supply LPG and crude oil condensates which can be processed to produce white fuels like petrol, kerosene, ATF and naphtha.